Startup Color has become the symbol for everybody who thinks we're in a tech bubble: the company made the news for receiving a $41 million investment from Sequoia, then launched a mobile app that nobody understood.

At Facebook's F8 conference today, Color unveiled a new mobile app that lets you send live video from your phone directly to your Facebook friends, whether they're on a smartphone or the Web.

Hosting a visit in the new Color mobile app.Color

It's not a communication app like Skype or Facetime. In this early pre-beta stage, it doesn't even support audio. Instead, it's supposed to let you share experiences.

It sounds odd, but it actually seems so natural and appealing, it's a wonder nobody has done it before.

Here's how it works: install the app on your iPhone 4 or Android phone with a video camera. Log in with Facebook. You can view every photo you've ever uploaded to the site in reverse-chronological order, and do the same with your friends' photos. But that's not the cool part.

The cool part comes when you host a visit.

Your friends will receive a notification on their phones or Facebook pages asking if they want to join in. When they do, they'll see whatever your phone camera is seeing. If you're walking through Paris, they'll see that. If you're standing on top of the Empire State Building and rolling around the horizon, they'll see that.

Color founder Bill Nguyen told me that they're starting small -- only a couple hundred people are involved in the pilot, and he's only going to release it to the wider public when he sees that users are actually engaging and doing visits at least once a day.

He also admitted that Color's first approach was wrong because it was trying to create a social network itself, rather than building on the one that already has hundreds of millions of users and an army of developers creating cool apps for it.

The big question: how will Color make enough money to pay back Sequoia and its other investors?

Advertising.

Nguyen thinks Facebook has an opportunity to become the third evolution of advertising, just like Google did a decade ago.

With respect to Color, he expects to make the most of being on Facebook's platform. "If my friend Madeline's in Paris and I'm doing a virtual visit from San Francisco, what would Air France pay for that information so they could provide an offer. It's incredibly contextual."

Color founder Bill Nguyen has a cotton candy machine his desk. Why? Because he likes to make cotton candy.Matt Rosoff, Business Insider